In American usage, we generally use the gender-neutral "it" to refer to countries.

Rahul suggests "she" and that brings up an interesting cultural point. In some cultures/languages, the homeland is viewed as masculine, while in others it is viewed as feminine. For instance, Germans refer to their home as the "Fatherland" while to Russians, it is the "Motherland".

Because English does not use masculine and feminine noun and verb forms, we tend to adopt the neutral for all. Unless you know, for sure, which gender is preferred by a country's residents, it is best to remain neutral. Otherwise, you may inadvertantly insult those residents.

I think the American trend toward "it" comes from the same 1960s impulse that tells us to avoid "sexist" language. The Wikipedia article tells us that "she" is dying and notes the Chicago Manual of Style (16th edition, University of Chicago Press, 2010) discourages its use when referencing objects. I only hear/see it used in reference to ships these days. Does "she" remain prevelant in areas where the British influence remains stronger?